EXW, FCA, FOB, CIF and DDP allocate delivery responsibilities differently. The Incoterm must include a named place or port and the agreed edition. Compare where delivery occurs, when risk transfers and who arranges each transport or customs step; freight payment and risk transfer are not always the same event.
EXW, FCA, FOB, CIF and DDP allocate delivery responsibilities differently. The Incoterm must include a named place or port and the...
Each of the 11 Incoterms 2020 rules shifts cost and risk at a different point in the journey — choosing one without understanding...
On the "Incoterms ® 2020 Guide: All 11 Rules Explained" page, review cargo facts, route assumptions, documents and handover...
Incoterms® (International Commercial Terms) are 11 standardized three-letter trade rules, published and periodically updated by...
Explore the Incoterms rules through the transport, cost and handover questions they address. Use the guide to understand a proposed term and the details that still need agreement in the purchase contract.
EXW, FCA, FOB, CIF and DDP allocate delivery responsibilities differently. The Incoterm must include a named place or port and the agreed edition. Compare where delivery occurs, when risk transfers and who arranges each transport or customs step; freight payment and risk transfer are not always the same event.
Use Incoterms ® 2020 Guide: All 11 Rules Explained as the topic: each level depends on the record discipline established before it. Complete the beginner controls before relying on the advanced ones.
Map the physical and documentary journey. A beginner should know who prepares each document, who contracts each carrier, where risk transfers, and which costs remain estimates. Use Incoterms ® 2020 Guide: All 11 Rules Explained as the decision record for this level.
Normalize route and landed-cost evidence. A practitioner can reconcile cargo facts, quotes, Incoterms wording, customs inputs, and release documents before shipment. Reconcile that evidence inside the Incoterms ® 2020 Guide: All 11 Rules Explained workflow.
Control exceptions and post-entry exposure. An expert manages classification governance, valuation evidence, broker instructions, insurance, document retention, routing contingencies, and regulatory change. Apply those governance rules to the Incoterms ® 2020 Guide: All 11 Rules Explained decision.
Each of the 11 Incoterms 2020 rules shifts cost and risk at a different point in the journey — choosing one without understanding that handoff point can leave a buyer paying for services they didn’t expect, or exposed to risk they didn’t plan for.
EXW, FOB, CIF, DAP, and the other rules are compared side by side against the buyer’s shipping experience and risk tolerance. Keep the owner, open questions, and buyer approval visible as work moves forward. Use rule-by-rule comparison to test the produced goods against controlled requirements, not a supplier's general standard. Link measurements, photographs, functional checks, sample references, affected quantities, corrections, and buyer disposition so the inspection record can support a release or stop decision.
The chosen Incoterm is checked against the purchase contract and shipping documents so all parties reference the same rule. Keep the owner, open questions, and buyer approval visible as work moves forward. Use contract term alignment to define a clear stop condition, the evidence that triggers it, the person responsible for escalation, and the decision needed before more money or cargo is committed. Preserve conflicting records and require a traceable correction instead of relying on an informal assurance.
Incoterms® (International Commercial Terms) are 11 standardized three-letter trade rules, published and periodically updated by the International Chamber of Commerce (ICC), that fix which side — buyer or seller — pays for freight, insurance, and customs clearance, and exactly where the risk of loss or damage passes from one party to the other. The current version is Incoterms® 2020. On their own, Incoterms have no legal force — they only apply once a contract or purchase order names them explicitly, for example "FOB Ningbo, Incoterms® 2020."
Every China sourcing negotiation eventually runs into a three-letter code on a supplier's quotation. This guide covers all 11 rules in one place. If you only need the three terms that come up most often in China trade, the dedicated FOB vs CIF vs DDP comparison goes deeper on those specifically. For EXW, FCA, and DAP, standalone guides below cover the practical detail this overview only summarizes.
The single biggest source of confusion is treating "who pays" and "who bears risk" as the same question. They aren't, for four of the eleven rules. Every Incoterms rule actually answers three questions independently:
Under CIF and CFR, for instance, the seller pays freight all the way to the destination port — but risk already passed to the buyer the moment the goods were loaded on the vessel in China. If the ship sinks mid-voyage, the freight was the seller's cost, but the cargo loss is the buyer's risk. The same split applies to CPT and CIP for non-sea transport. This gap is exactly why cargo insurance matters even under a term where the seller is "paying for shipping" — see shipping insurance & risk.
The ICC splits the 11 rules into two groups by transport mode. Using a sea-only term for an air or rail shipment is a common supplier-quotation mistake — see mistakes this guide prevents.
| Rule | Transport mode | Risk transfers at | Seller insures? | Import duty paid by |
|---|---|---|---|---|
| EXW Ex Works | Any mode | Seller's premises | Not obliged | Buyer |
| FCA Free Carrier | Any mode | Handover at named place | Not obliged | Buyer |
| CPT Carriage Paid To | Any mode | Handover to first carrier | Not obliged | Buyer |
| CIP Carriage & Insurance Paid To | Any mode | Handover to first carrier | Yes — Clauses (A), all-risk | Buyer |
| DAP Delivered at Place | Any mode | Arrival, ready for unloading | Not obliged | Buyer |
| DPU Delivered at Place Unloaded | Any mode | After unloading at destination | Not obliged | Buyer |
| DDP Delivered Duty Paid | Any mode | Arrival, ready for unloading | Not obliged | Seller |
| FAS Free Alongside Ship | Sea & inland waterway | Alongside the vessel | Not obliged | Buyer |
| FOB Free on Board | Sea & inland waterway | Goods loaded on board | Not obliged | Buyer |
| CFR Cost and Freight | Sea & inland waterway | Goods loaded on board | Not obliged | Buyer |
| CIF Cost, Insurance & Freight | Sea & inland waterway | Goods loaded on board | Yes — Clauses (C), minimum | Buyer |
Read left to right, the "any mode" list roughly tracks a ladder of increasing seller responsibility: EXW carries the least, DDP the most. FCA, DAP, and DDP are covered in full-length dedicated guides linked above and in the "Related guides" section below.
Incoterms are revised roughly every ten years; the current edition, effective since 1 January 2020, made four changes worth knowing before quoting an older contract template:
As of this guide's publication, Incoterms® 2020 remains the current, active edition — there has been no newer revision.
The term written on a purchase order only protects you if what happens at the factory and port matches what the term assumes — export documents filed correctly, the right party loading the right vehicle, cargo insured when nobody else is obliged to insure it. LifaSourcing.com coordinates that from the China side: confirming the agreed Incoterm with the supplier before deposit, checking export paperwork, and coordinating the shipment itself through shipping coordination — so the three-letter code and the physical handover actually line up.
On the "Incoterms ® 2020 Guide: All 11 Rules Explained" page, review cargo facts, route assumptions, documents and handover responsibilities together before approving the freight plan.
Record dimensions, weight, value, ready date, supplier locations, and destination requirements.
Compare time, cost, consolidation, customs, insurance, and delivery responsibility.
Confirm documents, booking data, carton marks, contacts, and release approval before movement.
Continue through the individual terms and the logistics decisions around them.
The term with the smallest seller obligation — and its China catch.
Read the guide 06The term the ICC recommends over FOB for container handovers.
Read the guide 07Door delivery while keeping import clearance under your own control.
Read the guide 08The three-way comparison every first shipment negotiation involves.
Read the guideModel EXW, FOB, CIF, and DDP scenarios with real HS-based duty rates using the free Landed Cost Calculator.
The questions importers ask most about Incoterms 2020.
Incoterms (International Commercial Terms) are 11 standardized three-letter trade terms published by the International Chamber of Commerce (ICC) that define which party, buyer or seller, is responsible for transport, insurance, customs clearance, and risk at each stage of an international shipment. The current version is Incoterms 2020.
No. Incoterms only take effect when a sales contract or purchase order explicitly references them, for example "FOB Ningbo, Incoterms 2020." Without that reference, a supplier writing "FOB" on a quotation is shorthand, not a legally defined obligation.
Each Incoterms rule answers three separate questions: who pays which costs, at what point risk of loss or damage passes from seller to buyer, and who clears export and import customs. These points do not always align. Under CIF and CFR, for example, the seller pays freight to the destination port, but risk already transferred to the buyer once the goods were loaded on the vessel at the origin port.
FOB is the most common starting point because Chinese suppliers quote it by default, it keeps international freight and insurance decisions with the buyer, and its logic is easy to follow. Some buyers prefer a fully hands-off DDP shipment, but should first confirm who is actually acting as importer of record at destination before assuming DDP is risk-free.
No. Incoterms govern delivery, risk, and logistics obligations only. They say nothing about price, payment timing, deposit percentage, or currency. Payment terms are negotiated separately and documented in the sales contract or purchase order.
It appears on purchase orders often, but it is technically incorrect and creates ambiguity. FAS, FOB, CFR, and CIF are defined only for sea and inland waterway transport, where "on board" has a clear meaning. For air, rail, road, or multimodal shipments, use one of the seven rules designed for any mode: EXW, FCA, CPT, CIP, DAP, DPU, or DDP.
In the "Logistics" section of Incoterms ® 2020 Guide: All 11 Rules Explained, review cargo facts, route assumptions, documents and handover responsibilities together before approving the freight plan.
Record dimensions, weight, value, ready date, supplier locations, and destination requirements.
Compare time, cost, consolidation, customs, insurance, and delivery responsibility.
Confirm documents, booking data, carton marks, contacts, and release approval before movement.
Each term below has its own page, and the common buyer comparison is FOB against CIF and DDP.
This sequence turns Incoterms ® 2020 Guide: All 11 Rules Explained into a reviewable sourcing record. Adapt the depth to the product, order, market, and risk while keeping the decision trail intact.
Record product description, composition, value basis, origin, quantity, dimensions, weight, dangerous-goods status, and destination. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Confirm tariff classification, restrictions, licenses, testing, marking, tax, and importer responsibilities with current official sources. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
State the named place, Incoterms rule where used, transport mode, insurance responsibility, and transfer points in the contract. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Compare the same cargo facts, origin and destination charges, customs scope, free time, surcharges, transit assumptions, and exclusions. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Match the invoice, packing list, transport document, origin evidence, permits, and product records before cargo release. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Resolve classification, valuation, consignee, labeling, document, or routing questions before the cargo reaches an irreversible handoff. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Reconcile final charges, damage or shortage evidence, customs outcomes, delivery timing, and lessons for the next shipment. Apply this step to Incoterms ® 2020 Guide: All 11 Rules Explained: retain the input and approval that make it reviewable.
Use this Incoterms ® 2020 Guide: All 11 Rules Explained table as a working rule. It does not replace current legal, customs, testing, financial, or technical advice for the exact transaction.
| Route | Use it when | Minimum evidence | Stop condition |
|---|---|---|---|
| Use a planning estimate | You are comparing product or route feasibility before final cargo data exists. | Stated assumptions, range, exclusions, date, currency, and sensitivity. | The estimate is presented as a confirmed duty or freight charge. |
| Request a firm operational quote | Cargo dimensions, weight, route, timing, and service scope are sufficiently defined. | Itemized origin, freight, destination, customs, and delivery scope. | Quotes use different Incoterms, cargo facts, or included charges. |
| Escalate to a licensed specialist or authority | Classification, valuation, restricted goods, sanctions, licensing, or tax treatment is uncertain. | Written ruling, broker advice, permit, or authority guidance for the exact facts. | A supplier or generic online calculator is the only basis for release. |
Use Incoterms ® 2020 Guide: All 11 Rules Explained to frame the matched case decision without adding claims or outcomes beyond its source classification.
Customs valued the machinery at 2.3× the declared price, demanding additional duties; the container sat at port accruing demurrage at $140/day.
Escalate Incoterms ® 2020 Guide: All 11 Rules Explained: act when the decision affects safety, legal market access, protected IP, high-value tooling, restricted goods, unusual payment instructions, disputed identity, or a dependency that could stop the business.
Set the Incoterms ® 2020 Guide: All 11 Rules Explained threshold before the event: defect severity, cost variance, delay, capacity load, document conflict, compliance gap, payment change, or repeated corrective-action failure.
Escalate Incoterms ® 2020 Guide: All 11 Rules Explained: bring in the relevant laboratory, engineer, customs broker, lawyer, accountant, insurer, or market authority when credentials or current jurisdiction-specific interpretation are required.
Keep the Incoterms ® 2020 Guide: All 11 Rules Explained evidence: source documents, versions, correspondence, approvals, exceptions, corrective actions, and review dates for the period required by the buyer's market, contract, and internal policy.
This Incoterms ® 2020 Guide: All 11 Rules Explained tutorial was reviewed on 2026-09-02. Standards, tariffs, customs procedures, platform rules, product requirements, and enforcement practice can change. Confirm the current rule for the exact product, configuration, origin, destination, importer, sales channel, and claim before relying on it.
For Incoterms ® 2020 Guide: All 11 Rules Explained, model the same goods, quantity, Incoterms rule, named place, freight basis, duty assumptions, fees and destination costs for every route before approval.
Settle these practical questions before applying Incoterms Guide to a live supplier, order, quality, compliance, or shipment decision.
For a hypothetical Incoterms Guide decision, record cargo dimensions, weight, value, ready date, supplier location, destination, and delivery responsibility. Compare routes and charges on the same basis, identify excluded costs, and confirm documents and handover points before booking. The example is non-binding and must be replaced by current quotes and official requirements.
Incoterms Guide is practical sourcing guidance, not verification of a specific supplier or product. It does not set the applicable HS code, destination rules, contract terms, price, lead time, or inspection result. Confirm current requirements for the exact model and market with the responsible customs, testing, legal, tax, or compliance specialist before acting.
Before acting on Incoterms Guide, check the responsible destination customs authority, regulator, and standards body for the exact product and record the source title, effective date, and date checked. A supplier statement or search summary is not a legal source. Where this page does not show a dated reference, it should be treated as a working framework rather than a current legal determination.
ICC is the owner and publisher of the Incoterms rules. Its current materials explain the 11 Incoterms 2020 rules and how they allocate delivery cost, risk and obligations. The sales contract must still name the rule, place and version.
Sources checked: 30 August 2026. Recheck the current rule, edition and destination requirements before acting.
